Customer Acquisition Cost Calculator

Understanding Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) measures the total cost of sales and marketing efforts required to acquire a single paying customer. It is a critical unit economics metric for SaaS companies, e-commerce stores, and digital startups.

Key CAC & LTV Formulas

Analyzing customer acquisition efficiency requires evaluating CAC, LTV/CAC ratio, and payback periods:

1. Customer Acquisition Cost (CAC):

$$\text{CAC} = \frac{\text{Total Marketing Spend} + \text{Total Sales Overhead}}{\text{Number of New Customers Acquired}}$$

2. LTV to CAC Ratio:

$$\text{LTV/CAC Ratio} = \frac{\text{Customer Lifetime Value (LTV)}}{\text{Customer Acquisition Cost (CAC)}}$$

3. CAC Payback Period (Months):

$$\text{CAC Payback Period} = \frac{\text{CAC}}{\text{Monthly Average Revenue Per User (ARPU)}}$$

What is a Healthy LTV/CAC Ratio?

A benchmark LTV/CAC ratio for sustainable growth is 3.0x or higher. A ratio below 1.0x indicates that the company spends more to acquire customers than those customers generate in lifetime value, leading to net losses. A ratio above 5.0x may suggest under-investing in acquisition growth.